[THE INVESTOR] Dunhill maker British American Tobacco is throwing its hat into Korea’s heated tobacco market with the upcoming release of Glo, presenting an alternative to Philip Morris International’s existing IQOS products.

On Aug. 10, BAT announced through a press conference at The Four Seasons Seoul that it will be opening its first Glo flagship store in the Garosugil shopping district of Seoul on Sunday, kicking off its sales in Korea.

 

Glo from BAT.

Both Glo and IQOS are heated tobacco products, which means that sticks made with tobacco leaves are heated inside electronic devices instead of being burned. Both companies claim that the heat-not-burn products have the potential to reduce smoking-related health risks by over 90 percent.

For now, the actual long-term health benefits have not been proven through clinical studies, and global standards that allow comparisons of risk between emissions in cigarette smoke and the vapor from heat-not-burn products do not yet exist, according to BAT Chief Scientific Officer Christopher Proctor.

The Ministry of Food and Drug Safety, meanwhile, has set out to test any harmfulness of heated tobacco, starting with the IQOS brand this month.

Proctor said that there is a yearlong clinical study that is set to begin in October in the UK, which will be a step toward proving health benefits beyond potentially reduced risk.

“We have three wins in next generation products. More choice, more innovation, less harm,” said Roberta Palazzetti, the area director for BAT Greater North Asia. 

Glo has already been released in certain regions of Japan including Sendai, Tokyo, Miyagi and Osaka. It competes with IQOS in those markets as well.

BAT’s main marketing point for Glo is its simplicity. As opposed to PMI‘s IQOS, which is composed of a palm-sized pocket charger and a separate cigarette holder that is inserted into the charger after smoking each stick, Glo consists of just one palm-sized device that can power more than twenty sticks with one full charge.

“It’s one touch, one button. It’s got a very easy-to-understand user interface. It’s easy to clean. Lastly, it’s very easy to carry,” said Hamish Norrie, the marketing director of BAT Korea.

The price point is also different -- the IQOS device sells for 120,000 won while Glo is priced at 90,000 won. Both PMI’s HEETS sticks and BAT’s Neostiks sell for 4,300 won per pack of 20.

Neostiks will be available in three flavors -- Bright Tobacco, a roasted tobacco flavor, the minty Fresh Mix, and the citrus-laced Zest Mix.

The Glo device will also come in five colors including silver, pink, blue, gold and black.

Unlike in the Japanese market, in the Korean market heat-not-burn products face another competitor in addition to traditional cigarettes: e-cigarettes that use nicotine-laced liquid instead of tobacco. Since e-cigarettes also do not contain the harmful toxins arising from combustion, PMI and BAT are hoping to appeal to consumers through accessibility. In addition to flagship stores, PMI’s IQOS is available at all major convenience store chains except GS25, where BAT will be selling Glo.

The tobacco market is set to become even more competitive, with domestic cigarette maker KT&G also rumored to be preparing a heat-not-burn product for a September launch. 

After opening three flagship stores in Seoul this year in Garosugil, Hongdae and Gangnam, BAT is planning to expand its sales of Glo nationwide by the first half of next year. 

By Won Ho-jung/The Korea Herald (hjwon@heraldcorp.com)